'Heavy cost' of China coal use

Hidden fallout from cheap coal cost the country 7 per cent of its GDP last year, study finds.

28 Oct 2008 08:18 GMT

The report said China will rely on coal for the bulk of its energy needs for decades [EPA]

The 63-page report identified government price distortions and weak oversight as the key problems arising from China's dependency on cheap coal.

It also takes into account the distortion of government regulations which keep coal prices down such as land ownership policies, and inadequate worker safety and worker compensation systems.

Weaknesses

"Environmental and social damages are underestimated while using coal in China as a result of market failures and weakness in government regulations", said Mao Yushi, an economist and lead author of the report.